Does Clovis Oncology, Inc.'s (NASDAQ:CLVS) CEO Pay Reflect Performance?

Patrick Mahaffy has been the CEO of Clovis Oncology, Inc. (NASDAQ:CLVS) since 2009. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Clovis Oncology

How Does Patrick Mahaffy's Compensation Compare With Similar Sized Companies?

Our data indicates that Clovis Oncology, Inc. is worth US$599m, and total annual CEO compensation was reported as US$6.3m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$689k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a selection of companies with market caps ranging from US$200m to US$800m, we found the median CEO total compensation was US$2.2m.

Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Speaking on an industry level, we can see that nearly 22% of total compensation represents salary, while the remainder of 78% is other remuneration. It's interesting to note that Clovis Oncology allocates a smaller portion of compensation to salary in comparison to the broader industry.

Thus we can conclude that Patrick Mahaffy receives more in total compensation than the median of a group of companies in the same market, and of similar size to Clovis Oncology, Inc.. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous. The graphic below shows how CEO compensation at Clovis Oncology has changed from year to year.

Is Clovis Oncology, Inc. Growing?

Clovis Oncology, Inc. has seen earnings per share (EPS) move positively by an average of 6.9% a year, over the last three years (using a line of best fit). Its revenue is up 50% over last year.

It's hard to interpret the strong revenue growth as anything other than a positive. Combined with modest EPS growth, we get a good impression of the company. So while I'd stop short of saying growth is absolutely outstanding, there are definitely some clear positives! You might want to check this free visual report on analyst forecasts for future earnings.

Has Clovis Oncology, Inc. Been A Good Investment?

With a three year total loss of 85%, Clovis Oncology, Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We examined the amount Clovis Oncology, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

The growth in the business has been uninspiring, but the shareholder returns have arguably been worse, over the last three years. Shareholders may wish to consider further research. Although we don't think the CEO pay is too high, it is probably more on the generous side of things. Looking into other areas, we've picked out 4 warning signs for Clovis Oncology that investors should think about before committing capital to this stock.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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